Tuesday, December 21 2010 11:34
Areximbank-Gazprombank Group expected to increase assets 40%
ArmInfo. Interview with Vigen Barseghyan, Deputy Director General of Areximbank-Gazprombank Group
What financial indicators does the bank plan for late 2010 and within the coming two years?
By the end of this year the bank's assets will exceed 70 billion drams. The share of the loan portfolio will be 70%. Gazprombank (OJSC) will provide a US$10 million subordinated loan till the end of the year. In fact, general obligations will total 57bln AMD, while the regulatory capital will amount to 20bln AMD. The bank expects 850 million drams profit by the end of 2010.
Within the scope of the Bank’s Strategic Development Program for 2011, the assets will be increased more than 40% (30bln AMD) to 102bln AMD, the loan portfolio - 22bln AMD (40%) to 70bln AMD. The corporate loan book will grow by 20bln AMD (50%) to 60bln AMD (82.5% of the total lending portfolio), the private loan book - by 2bln AMD (16.7%) to 13bln AMD (17,5%). By the end of 2011 the bank's liabilities will total 83bln AMD - 45% more than in 2010. Considering the growth of the statutory capital by US$10 million, total capital for late 2011 will made up 19 billion drams. Actually, the bank expects 1.3bln AMD or $3.5mln profit in 2011- 50% more than this year.
What is the loan limit for big customers? What is your assessment of competition in that segment?
There are no limits. In 2011 we are going to provide a total of US$100 million corporate loans from own and raised funds. In fact, the loan portfolio of the bank will at least double. The strategy of our bank underlines effective interest rate management policy. This means that an agreement is made with a customer that estimates all the incomes (not only interests) from the customer. A customer must be well aware how much will the banking service cost him. From the viewpoint of minimization of customers’ expenses in conditions of the financial crisis it is a relevant and important factor to raise new corporate customers. In addition, we provide complex service on preferential terms to the employees of companies. As regards competition, it makes banks constantly improve, develop new services, upgrade the service quality. In fact, healthy competition is in favor of everyone, and of customers, first of all.
Does the bank study any new business finance services?
Our new strategy is rather focused on technological and technical re-equipment of enterprises. Next year we plan to launch leasing operation. For this purpose, we are currently studying the given segment of the market. The Armenian leasing market is not big, but there is a range of big projects that we consider prospective. Considering the peculiarities of the local leasing market, our bank will use the experience of Gazprombank-Leasing Company, the affiliated company of our shareholder. In addition, we plan issue of express-loans to micro and small enterprises in 2011.
Areximbank-GPB Group increased SME financing for several times over the last year. What is the reason of such growth? What resources did the bank use to ensure such growth?
By December 1 2010 the SME portfolio of Areximbank-Gazprombank Group amounted to 3.8 bln drams, which is 65% higher than in the same period of 2009 (2.3 billion drams). The portfolio growth was connected with the post-crisis activation of economy. The credits were provided at the expense of the German-Armenian Fund (GAF) as well as from the own resources
of the bank. The number of the SME loan borrowers grew 83% over the given period of time.
The bank is currently studying possibility of raising funds from the World Bank for on-lending to SME. At what stage are the negotiations?
The leadership of the bank has recently met with representatives of the World Bank to initiate cooperation and possibility of fund raising for on-lending to SME. The parties made an arrangement to start the procedure of Areximbank-GPB Group’s involvement into the WB SME Access to Financing on preferential terms. I’d like to recall that as a result of negotiations with German KfW-financed GAF Areximbank-GPB Group received an official agreement for a credit limit for SME financing.
What are the terms for SME financing? What sectors do the borrowers of SME loans represent?
At present the bank provides loans in terms of the national dram at the annual interest of 13%-15% and USD loans at the annual interest of 11%-13%. Loan maturity is 7 years depending on the purpose of lending. The bank funds all sectors of economy, including trade, services, and industry.
You have said that in line with the Strategy for 2011 the loan portfolio of the bank will grow 40% to 70 billion drams. What is the share of auto loans and mortgage and what is your forecast of the growth of these loans for 2010-2011?
Within 2010 the bank’s loan portfolio grew almost 2.5-fold and totaled over 50 billion drams by the end of the year. The corporate loan portfolio grew 3.5fold and retail lending – almost 25%.
The bank is expected to boost the corporate customer attraction in 2011 focusing on service and financing of small and medium-sized enterprises to meet the tasks set by the shareholder. To promote growth of the lending portfolio it is necessary to promote corporate business segment, increase the share of the corporate loan portfolio in total (at least to 80%) and increase retail business scales.
In 2011 the total loan portfolio of the bank will be increased 40% to 70 billion drams. At the same time, the corporate loan portfolio will be increased 50% to 60.5 billion drams. Although the bank lays stress on the corporate lending, the portfolio of personal loans will be increased almost 20% in 2011. The structure of personal loan portfolio will not be changed significantly in 2011 as compared to 2010 – the shares of mortgage and auto loans will be left the same – 17% and 16%, respectively.
Do you plan opening of new branches in Armenia? Earlier Areximbank-GPB Group announced an intention to launch a new phase of extension of branches in 2011 in line with its strategy. Have you made the first steps?
In 2011 in line with the Development Strategy for 2010-2011, we are planning to open four branches in the capital and in the regions. Gazprombank Board has already approved the given project and the bank will start implementing it in early 2011. Besides, the head office will be moved to a more comfortable building in the city center to upgrade customer service quality, create more comfortable conditions for customers and upgrade the efficiency of the bank.
Mr. Barseghyan, the bank earlier declared that in late 2010 the private transfer turnover will total 35.1 billion drams, including 15.4 billion drams transfers to Armenia and 19.7 billion drams from Armenia…
Private transfers via Areximbank-GPB Group on the systems SWIFT, Contact, Leader, Money Gram, Bistraya Pochta, and Migom since the beginning of the year amounted to 19.5 billion drams, including 11.8 billion drams transfers from Armenia and 7.6 billion drams to Armenia. The volume has fallen.
What is the reason? Crisis?
There are many factors, including the crisis, but I think the major fact that impedes private transfers via our bank is the rapidly growing number of money transfer service points throughout Armenia. Local banks attack new and new money transfer systems and the number of the banks interested in provision of money transfer services is constantly growing as well.
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